{"id":43272,"date":"2023-08-01T21:57:07","date_gmt":"2023-08-02T01:57:07","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/merck-earnings-top-expectations-more-ma-could-be-next\/"},"modified":"2023-08-01T21:57:10","modified_gmt":"2023-08-02T01:57:10","slug":"merck-earnings-top-expectations-more-ma-could-be-next","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=43272","title":{"rendered":"Merck Earnings Top Expectations. More M&A Could Be Next."},"content":{"rendered":"
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The drug company
\n Merck
\n reported earnings Tuesday morning that surpassed past Wall Street expectations, signaling hope for a stock and a sector that have lagged behind the broader market this year.<\/p>\n

In an interview with Barron\u2019s<\/em>, Merck (ticker: MRK) CFO Caroline Litchfield said sales of the company\u2019s cancer treatments and vaccines were growing, and more M&A could be on the horizon.<\/p>\n

\n

\u201cWe have significant firepower left,\u201d Litchfield said, referring to the company\u2019s capacity to make more acquisitions. \u201cOur company\u2019s got a really strong balance sheet, and we have really strong earnings growth over the coming years, which will only lead to further increased capacity to invest.\u201d<\/p>\n

Merck reported sales of $15 billion for the quarter, beating the FactSet consensus estimate of $14.5 billion, and up 3% from the same quarter last year. The company lost $2.06 per share on a non-GAAP basis. Analysts had expected a larger loss of $2.18 per share, according to FactSet.<\/p>\n

The reported loss for the quarter was due to the company\u2019s $10.8 billion acquisition of Prometheus Biosciences, which closed in June. Following new Securities and Exchange Commission guidance, the company recorded the cost of Prometheus as a $4.02 per share charge to the second quarter\u2019s non-GAAP earnings.<\/p>\n

If not for the Prometheus acquisition, earnings for the quarter would have been $1.96 per share, up 4.8% from the same quarter last year.<\/p>\n

Even as sales of the company\u2019s Covid-19 antiviral Lagevrio fell to an almost negligible level, sales of the mega-blockbuster cancer drug Keytruda and the human papillomavirus vaccine Gardasil came in above the FactSet analyst consensus estimate, and were up sharply from the same quarter last year.<\/p>\n

\u201cThe story is there\u2019s real underlying momentum in our business,\u201d Litchfield said. \u201cThat momentum is as a result primarily of great growth in oncology and vaccines.\u201d<\/p>\n

Merck said it now expects full-year 2023 sales of between $58.6 billion and $59.6 billion, up from its previous estimate of between $57.7 billion and $58.9 billion. It now expects non-GAAP earnings this year of between $2.95 and $3.05 per share.<\/p>\n

Merck shares have slumped in recent months, down 7.6% since the end of April, a period in which the
\n S&P 500
\n has climbed 10%. Since the start of the year, Merck is down 3.9%, while the S&P 500 is up 19.5%.<\/p>\n

The company is facing down the potential loss of U.S. exclusivity for Keytruda in 2028. In the meantime, however, the drug is besting sales expectations. Merck reported Keytruda sales of $6.3 billion in the second quarter, beating the FactSet consensus estimate of $5.9 billion.<\/p>\n

Sales of Gardasil were up 47% from the same quarter last year, to $2.5 billion, which the company attributed to demand outside the U.S., notably in China.<\/p>\n

\u201cWe\u2019ve seen strong demand growth in just about every country around the world,\u201d Litchfield said.<\/p>\n

Sales Lagevrio were $203 million in the quarter, roughly in line with the FactSet consensus estimate of $193 million, and down from $1.2 billion in the same quarter last year. Lagevrio hasn\u2019t been widely used in the U.S. Merck said that lower sales in Japan and a decision by the U.K. not to renew a supply contract for the medicine were behind the drop.<\/p>\n

\u201cExcluding that Lagevrio impact [and the impact of foreign exchange], the underlying [revenue] growth for our company is 14%,\u201d Litchfield said. \u201cThat growth is really driven by phenomenal performance on Keytruda\u2026Gardasil\u2026as well as the launch of Vaxneuvance in pediatrics,\u201d the company\u2019s pneumococcal disease vaccine.<\/p>\n

Questions have circled around whether the company will do more M&A, after the Prometheus deal this year. Various outlets reported last summer that Merck was in talks to buy the biotech
\n Seagen
\n (SGEN), which has a market value of $36 billion. Those talks failed, but no Merck acquisition target of that size has since emerged.<\/p>\n

Litchfield said that the company was on the hunt for deals. \u201cWe have a portfolio of business development opportunities that we are reviewing, and it\u2019s in many different areas,\u201d she said. \u201cWhen science and value align, we will act.\u201d<\/p>\n

The company is holding a call for investors at 8 a.m. on Tuesday.<\/p>\n

Merck is among the companies that has sued the federal government in an effort to block implementation of a law that would allow the Medicare program to negotiate the prices of certain drugs. As Barron\u2019s<\/em> reported last week, the litigation effort seems to have decent odds of at least postponing implementation of the law, though its prospects are hard to predict.<\/p>\n

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The drug company Merck reported earnings Tuesday morning that surpassed past Wall Street expectations, signaling hope for a stock and a sector that have lagged behind the broader market this year. In an interview with Barron\u2019s, Merck (ticker: MRK) CFO Caroline Litchfield said sales of the company\u2019s cancer treatments and vaccines were growing, and more […]<\/p>\n","protected":false},"author":1,"featured_media":43273,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-43272","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nMerck Earnings Top Expectations. 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